Correlation Between Enpro Industries and Graco

Can any of the company-specific risk be diversified away by investing in both Enpro Industries and Graco at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Enpro Industries and Graco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enpro Industries and Graco Inc, you can compare the effects of market volatilities on Enpro Industries and Graco and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Enpro Industries with a short position of Graco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enpro Industries and Graco.

Diversification Opportunities for Enpro Industries and Graco

0.65

Correlation Coefficient

Enpro Industries  Graco

Poor diversification

The 3 months correlation between Enpro and Graco is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Enpro Industries and Graco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graco Inc and Enpro Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Enpro Industries are associated (or correlated) with Graco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graco Inc has no effect on the direction of Enpro Industries i.e., Enpro Industries and Graco go up and down completely randomly.

Pair Corralation between Enpro Industries and Graco

Considering the 90-day investment horizon Enpro Industries is expected to generate 1.67 times more return on investment than Graco. However, Enpro Industries is 1.67 times more volatile than Graco Inc. It trades about 0.02 of its potential returns per unit of risk. Graco Inc is currently generating about 0.02 per unit of risk. If you would invest  17,323  in Enpro Industries on December 27, 2024 and sell it today you would earn a total of  114.00  from holding Enpro Industries or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Enpro Industries  vs.  Graco Inc

Enpro Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enpro Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Enpro Industries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Graco Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graco Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Graco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Enpro Industries and Graco

The main advantage of trading using opposite Enpro Industries and Graco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enpro Industries position performs unexpectedly, Graco can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Graco will offset losses from the drop in Graco's long position.

The idea behind Enpro Industries and Graco Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.